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Pricing paradise
The art and business of property appraisal
At the heart of every real estate deal is an appraisal–whether it’s a mansion, a condo, a commercial warehouse or an undeveloped piece of land.
In negotiating a deal that’s fair to both the buyer and seller, much depends on the experience and professionalism of the appraiser. His assessment affects not only the final settlement but the terms of the insurance policy and the mortgage.
Robin Brownrigg, President of Bahamas Realty, urges prospective buyers to be fussy about choosing a certified appraiser.
“Look at their qualifications,” he advises. “Where they went to school and the depth of that schooling. Also look at their experience–experience is what makes the banks trust you.”
Assessing value
In determining the value of a property, an appraiser approaches the task in two basic ways: a sales comparison and a cost analysis.
In the former, he or she reviews the selling price of similar properties in that neighbourhood in the recent past. The cost-based analysis evaluates the condition of various features, such as driveways, landscaping and patios–along with the general condition of the surrounding neighbourhood.
It’s important to take depreciation factors into account in a cost analysis, say appraisers. These can include such things as ongoing construction work and a candid evaluation of the neighbourhood. Undesireable elements in a location will bring down the value of a property, no matter how much has been invested in it.
“People often spend more than the neighbourhood warrants,” says Brownrigg. “They can build their dream home [there], but they will never get their money out of it.”
Another important factor is the “effective” age of the building: An older house can still be highly valued if it has been well maintained.
Appraisers gather all the facts, combine both the cost and comparison values before making an assessment. The most valuable element, according to Brownrigg, is the sales comparison. The cost approach, he says, often contains “variables that are sometimes difficult to nail down.”
Brownrigg, who has been appraising all types of properties for more than 30 years, says good appraisers “go an extra mile for their client.” They also maintain good working relationships with all the leading banks and lending institutions in The Bahamas.
“I develop a relationship with bank managers and loan officers so they feel good about dealing with me,” Brownrigg says. “I put a lot of heart and a lot of pride into my profession.”
For assessments that require specialized knowledge, an appraiser may call upon other professionals such as contractors and quantity surveyors.
Bahamas Realty is affiliated with multinational real estate firm CB Richard Ellis and can work with them on complex assessments. “We have their huge resources at our disposal,” says Brownrigg. “If I feel I am getting out of my league, I will bring in a professional in that area and work with them.”
Positive outlook
Even the most experienced appraiser can run into unexpected trouble on the job, says Brownrigg. On one occasion he inadvertently went to the wrong property.
“I was working on a foreclosure appraisal, and they had the address wrong,” he says. “I went to the property and hopped over the front wall and through the gate. All of a sudden I saw four Rottweilers running at me… . I hurtled over the fence as these dogs went crashing into it. It was terrifying.”
Brownrigg, who has done appraisals on many high-profile properties–including Lyford Cay, Albany, Baha Mar and Baker’s Bay in Abaco–loves his work. “The joy for me in doing my job is that I am on a drop-dead gorgeous beachfront property at least once a week being paid by somebody to have a blast.”
And he is enthusiastic about the recovery of the real estate market, which slumped in The Bahamas in 2008. “In the last six months we have seen an improvement in sales. I think we need to wait it out one more year.”
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Pricing paradise
The art and business of property appraisal
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